ETF Liquidity Singapore — Bid-Ask Spreads and Trading Volumes Explained

ETF Liquidity Singapore — Bid-Ask Spreads and Trading Volumes Explained (2026)

ETF liquidity refers to how easily you can buy or sell ETF units at a fair price without moving the market. For Singapore investors, ETF liquidity has two layers: the liquidity of the ETF itself (trading volume on SGX or another exchange) and the liquidity of the underlying assets the ETF holds. Both affect your transaction costs and ability to exit positions efficiently. This article is educational and not financial advice.

Table of Contents
  1. What Is ETF Liquidity?
  2. On-Exchange vs Underlying Liquidity
  3. Bid-Ask Spread and Its Impact
  4. Market Makers and Their Role
  5. Liquidity of SGX-Listed ETFs
  6. How to Assess ETF Liquidity
  7. FAQ

What Is ETF Liquidity?

Liquidity describes the ease of converting an asset to cash at a fair price. A liquid ETF can be bought or sold quickly with minimal price impact and a narrow bid-ask spread. An illiquid ETF may have wide spreads, meaning you pay more when buying and receive less when selling — an implicit cost on top of the management fee (expense ratio).

On-Exchange vs Underlying Liquidity

ETF liquidity has two distinct layers:

  1. On-exchange (secondary market) liquidity: The volume of ETF units traded on the stock exchange. Low volume ETFs may have wide bid-ask spreads and be difficult to trade in large size without price impact.
  2. Underlying (primary market) liquidity: The liquidity of the securities the ETF holds. If the underlying assets are liquid (e.g. S&P 500 stocks), authorised participants (APs) can create and redeem ETF units efficiently, keeping the ETF price close to NAV even if on-exchange volume is low.

This is why a large global ETF like the SPDR S&P 500 ETF (SPY) can trade efficiently even during periods of low volume — the underlying US equities are extremely liquid. Conversely, a niche ETF holding illiquid small-cap bonds would be harder to trade even if it had decent SGX volume.

Bid-Ask Spread and Its Impact

The bid-ask spread is the difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). For a Singapore investor, every trade incurs half the spread as a cost. Example: if a REIT ETF has a bid of SGD 1.00 and ask of SGD 1.02, the spread is SGD 0.02 (2%). Buying immediately costs you 1% above mid-price; selling costs another 1%. Compare this to a narrow-spread ETF where the spread might be just 0.1% — significantly less frictional cost.

Market Makers and Their Role

SGX-listed ETFs are supported by one or more designated market makers (MMs) who commit to providing continuous two-sided quotes (bid and ask) during market hours. Market makers help keep spreads tight even when natural buy-sell interest is low. The presence of a committed market maker significantly improves the liquidity experience for retail investors in SGX ETFs. You can check each SGX ETF’s market maker on the SGX website.

Liquidity of SGX-Listed ETFs

SGX-listed ETFs vary significantly in liquidity. The most liquid include:

  • SPDR Straits Times Index ETF (ES3) and Nikko AM Singapore STI ETF (G3B): High SGX volume, tight spreads
  • SPDR Gold Shares (O87): Good liquidity backed by highly liquid gold market
  • NikkoAM-Straits Trading Asia ex Japan REIT ETF (CFA): Moderate liquidity

Less popular niche ETFs on SGX may have very low daily volumes (sometimes less than SGD 10,000/day) with wide spreads of 0.5–2%. For these, use limit orders and be patient. Alternatively, consider buying equivalent ETFs on US exchanges through a broker like Interactive Brokers where spreads on US-listed ETFs are typically very tight. See our How to Buy ETF in Singapore guide.

How to Assess ETF Liquidity

Before buying an ETF, check:

  1. Average daily trading volume (ADV): SGX ETF volume data is on sgx.com. Higher ADV = more liquid.
  2. Bid-ask spread: Check the live order book in your brokerage app before placing an order. If the spread looks wide, use a limit order at or near mid-price.
  3. Assets Under Management (AUM): Larger ETFs with higher AUM generally have better liquidity as more institutions trade them.
  4. Underlying asset liquidity: For bond ETFs especially, check if the underlying bonds are liquid.
  5. Expense ratio: Liquidity costs should be considered alongside the expense ratio. See our Expense Ratio Singapore guide.
FAQ: ETF Liquidity Singapore

Does low volume mean an ETF is risky?

Low on-exchange volume doesn’t necessarily mean the ETF is risky. If the underlying assets are liquid, market makers can create and redeem units efficiently, keeping the price close to NAV. However, low volume usually means wider bid-ask spreads, increasing your transaction costs.

How do I buy a low-volume SGX ETF without overpaying?

Use a limit order at or near the mid-price (midpoint between bid and ask). Be patient — the order may take time to fill. Avoid market orders for low-volume ETFs as you may pay the full ask price or worse.

What is a market maker in SGX ETFs?

A market maker is a designated firm that commits to continuously quoting both buy and sell prices for an SGX-listed ETF during market hours. This ensures investors can always trade the ETF even when natural buyer-seller interest is low.

Are US-listed ETFs more liquid than SGX-listed ETFs?

Generally yes. US-listed ETFs like SPY, VT, or CSPX (on London Stock Exchange) have much higher trading volumes and tighter spreads than their SGX equivalents. Singapore investors can access these through brokers like Interactive Brokers.

What is the most liquid ETF on SGX?

The SPDR Straits Times Index ETF (ES3) and Nikko AM Singapore STI ETF (G3B) are typically the most actively traded ETFs on SGX. SPDR Gold Shares (O87) also has good liquidity backed by the highly liquid gold market.